Springfield Hospital Pleads Case

Montpelier — Executives of Springfield Hospital told a hearing of the Green Mountain Care Board on Tuesday that the hospital was on track to post a $1 million operating loss in the fiscal year that ends Sept. 30, then faced skeptical questioning about the hospital’s request for a 5.1 percent revenue increase.

“If I give you this money, what does it get me in the next 10 years?” Al Gobeille, the board chairman, asked the Springfield executives who traveled here to seek state approval for a $55 million operating budget for fiscal 2015. “Sell me on it, guys, because right now I’m not buying it.”

Board members worried that Springfield’s financial woes would continue. They asked how long the hospital would continue to provide financial support for an affiliated clinic that also receives federal financial subsidies — no end was anticipated, executives said — and urged them to explore additional ways to collaborate with Dartmouth-Hitchcock, as a number of other hospitals in the region have done in recent years.

Gobeille said during a break in the hearing that the five-member board, which had instructed the hospitals to submit budgets with net patient service revenue increases of no more than 3 percent, would probably vote on Springfield’s request in early September. The board reviews budget proposals from all 14 Vermont hospitals.

On Tuesday, the board heard from executives from Springfield and three other hospitals, including Fletcher Allen Partners, the state’s largest medical institution, which is seeking $1.1 billion in revenue, and Gifford Medical Center in Randolph, which is seeking $59.9 million.

The board members seemed less interested in hospital budget specifics than in ideas about how to change the incentives and constraints that channel the $2 billion torrent of revenue flowing through the state’s hospitals each year.

Fletcher Allen Chief Executive John Brumsted offered this advice: “You’ve got to have the people who are delivering health care engage with the people who are receiving health care to put in place any change that’s going to last.”

But some issues won’t wait for process refinements. For example, Springfield Hospital, which now expects to post a minus 2.25 percent operating margin, said Chief Executive Tim Ford.

Andy Majka, the hospital’s chief financial officer, said he could not immediately translate that estimate into a projected dollar loss, but confirmed that it would exceed $1 million. Majka said that it was too early to say whether the operating loss would be offset by non-operating revenue, which would require the hospital to tap sources that he compared to a family nest egg.

Ford said that part of the revenue shortfall came because the hospital operated for some of the year without a full complement of three surgeons and other providers of revenue generating services. Staffing and security costs associated with providing mental health services in the hospital’s emergency room also hurt the bottom line, he said.

In its original budget submission, the hospital spelled out its service area’s “difficult payer mix, challenging demographics, the comparatively poor health status of our residents and (its) ever increasing social challenges (poverty, low educational attainment, drug use, crime, etc.)” The hospital said it was “providing quality and value to a high risk population and unfortunately current payment mechanisms do not reward such accomplishments.”

In a written response to questions from the board’s staff, Springfield said that the hospital now owes the federal government $225,000 as a result of an adverse ruling from auditors about reimbursement for the hospital’s payment of a state provider tax. That ruling could ultimately leave the hospital scrambling to come up with $1.3 million.

“We do not have the cash reserves for this issue nor do we have the balance sheet reserves,” the hospital stated.